The Bank of England (BoE) is set to hold interest rates at the current level despite inflation falling back to the 2 per cent target for the first time in nearly three years.
The UK’s central bank is expected to freeze interest rates at 5.25 per cent on Thursday after steadily increasing rates since 2021 in an effort to bring down inflation.
It comes after the Office for National Statistics revealed the Consumer Prices Index (CPI) dropped to 2 per cent in May, down from 2.3 per cent in April.
The new figure marked the first time inflation has been at the BoE’s target since July 2021, before the cost-of-living crisis saw inflation shoot up – at one stage hitting levels not seen for 40 years.
While the Resolution Foundation think-tank said the data would give the BoE “pause for thought”, the Confederation of British Industry (CBI) said the stage was now set for the bank to cautiously cut interest rates in August.
CBI principal economist Martin Sartorius said on Wednesday: “Today’s data sets the stage for the Monetary Policy Committee to cut interest rates in August, in line with our latest forecast’s expectations.”
Bank of England expected to hold interest rates at current level
The Bank of England (BoE) is set to hold interest rates at the current level despite inflation falling back to the 2 per cent target for the first time in nearly three years.
The UK’s central bank is expected to freeze interest rates at 5.25 per cent on Thursday after steadily increasing rates since 2021 in an effort to bring down inflation.
It comes after the Office for National Statistics revealed the Consumer Prices Index (CPI) dropped to 2 per cent in May, down from 2.3 per cent in April.